PUERTO RICO: An Introduction to Intellectual Property

PUERTO RICO: An Overview of the Intellectual Property Practice

Puerto Rico, nestled in the middle of the Caribbean, has been a commercial hub for centuries and continues to be an important social and economic bridge between the Americas. Puerto Rico’s legal system and economy reflect this rich history, with a distinct hybrid legal system that combines Spain’s Civil Law and the US’ Common Law systems.

The island’s economy is deeply rooted in its political relationship with the United States. Part of the US Free Trade Zones and Customs systems (the largest non-contiguous Foreign Trade Zone project in the United States), it offers the security and stability of a US jurisdiction and competitive leverage over other countries in the region. In addition, Puerto Rico’s government administrations have develop tax-related incentives for certain industries such as manufacturing and service sectors of the economy. The latest one, Act 60-2019 consolidates in one place dozens of previously approved incentive Acts, harmonising and standardising as much as possible, tax incentives applied to income, royalties, dividends and distribution of interest, and profits from capital. Furthermore, the small and medium businesses eligible under this Act, as well as exempt companies with operations in Vieques and Culebra, may receive additional tax incentives during the first five years of operation.

Puerto Rico has long been a haven for businesses and opportunity-seekers looking to relocate to paradise. More recently, it has become the home of a variety of businesses, disruptors, and wealthy forward-thinkers seeking to invest in and enjoy Caribbean life. Puerto Rico is constantly creating spaces for local and foreign businesses to produce, develop, and flourish; the latest, a booming intellectual property industry, is part of a trend of expansion and growth that has made investors sit up and take notice. Creative industries such as telecommunications, arts, design, urbanism, architecture, media, web design, and development, among others, arose as part of this search for new opportunities and this sector became a major part of the growing economy.

The island also offers many initiatives promoting start-ups and business incubators, consistently stimulating foreign and local businesses of all sizes to produce intellectual property. As a result, Puerto Rico has seen a growing trend in innovation and a fast-growing service industry composed of real estate, finance, insurance, and tourism.

The government’s targeted actions aimed at encouraging investment and innovation include Act No. 20/22, as well as the renovation of the Puerto Rico Trademark Office's (PRTO) electronic system, making it more accessible and practical. In 2018, the Governor of Puerto Rico signed a Memorandum of Understanding with the University of Puerto Rico (UPR), the Science, Technology, and Research Trust of Puerto Rico, and the Department of Commercial and Economic Development. The latter two entities serve as middlemen between the UPR and the United States Patent and Trademark Office (USPTO), facilitating the process of transferring technology and commercialising all intellectual property the University develops, therefore increasing the number of patents it is issued. In 2020, the Patent Pro-Bono Program, with a nationwide network of independently operated not-for-profit regional programs, expanded its coverage to include Puerto Rico.

In recent years, both government and private industry have focused on investment and development projects within the capital city of San Juan which will make Puerto Rico a standout destination for business and travel. District Live is designed to attract media and entertainment spaces. The Puerto Rico Film District will consist of sound studios, administrative offices, and all things necessary to make Puerto Rico a film production hub. Science City, a parcel of land deeded to the Science, Technology, and Research Trust of Puerto Rico, intends to be a globally recognised centre of innovation. Developments such as these continually inspire new ideas, inventions, and ventures, cementing Puerto Rico’s place as a forerunner in the intellectual property industry.

The USPTO’s Performance and Accountability Report for the 2021 Fiscal Year confirm Puerto Rico’s growing intellectual property trend:

• 83% increase in trademark applications filed by US residents in Puerto Rico between fiscal years 2017 and 2021.

• 50% increase in trademarks registered to US residents in Puerto Rico between fiscal years 2017 and 2021.

• 7% increase in patent applications filed by US residents in Puerto Rico between fiscal years 2017 and 2021.

• 71% increase in patents issued to US residents in Puerto Rico between fiscal years 2017 and 2020.

The island’s territorial status makes it subject to both US federal law and local law; the field of intellectual property is a prime example of how federal and local laws interact and complement each other. For example, patents, copyrights, and trademarks are governed by federal law, while trade secrets and image rights are governed by local legislation. In addition, in the case of trademark law, a local statute offers additional benefits for trademarks registered in Puerto Rico.

The Puerto Rico Trademark Act is subject to the Federal Trademark Act of 1946, the Lanham Act, and all its applicable provisions. Therefore, trademark registration can be acquired through the US federal system and/or local registration in the PRTO. Registration in Puerto Rico has several attractive advantages, including:

• statutory damages for trademark infringement;

• exclusive use of all registered trademarks within the Puerto Rican jurisdiction;

• the Certificate of Registration constitutes prima facie evidence of the validity of the registered trademark, the ownership of the person on record, and the exclusive right to use the trademarks;

• the Certificate of Registration allows the registrant to request an automatic preliminary injunction for the unauthorised use of a trademark by a third party, without the need of posting bail;

• local law provides clear guidelines for the computation of damages when the owner's rights over the registered trademark are infringed;

• provides for costs and lawyer fees for all prevailing plaintiffs in every trademark infringement case;

• the registered trademark will appear in trademark searches made by third parties.

Furthermore, the Puerto Rico Trademark Act provides for a deposit of all federal certificates of registration issued by the USPTO, which in turn publicises and protects all federally registered trademarks in Puerto Rico. Besides an advantageous trademark law, Puerto Rico enjoys other important intellectual property protections: the Moral Rights Act, the Right of Publicity Act, and the Trade Secrets Act.

Despite challenging economic trends, Puerto Rico has innovated, repurposing its economy, and creating a flourishing intellectual property industry. It continues to grow, attracting companies and entrepreneurs to do business in paradise.